THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, HOST: This is LATE EDITION, the last word in Sunday talk. (BEGIN VIDEO CLIP)

BLITZER: Russian tanks roll into the neighboring Republic of Georgia. Thousands are reported dead and the conflict is growing. We'll speak to both sides. What will impact be on U.S.-Russian relations? Two top members of the Senate Armed Services Committee, John Cornyn and Carl Levin, weigh in on that and more.

SEN. BARACK OBAMA, D-ILL.: We'll double the amount of energy that comes from renewable sources by the end of my first term.

BLITZER: Will either candidate's energy plan really provide relief at the pump? We'll talk to the governors of two battleground states, Republican Charlie Crist of Florida and Democrat Ed Rendell of Pennsylvania.

SEN. HILLARY RODHAM CLINTON, D-N.Y.: Anyone who voted for me or caucused for me has so much more -- has so much more in common with Senator Obama than Senator McCain.

BLITZER: But can Hillary Clinton really deliver for Barack Obama?

BLOOMBERG: During her six years in the Senate, she's won over skeptics by delivering for the state. BLITZER: We'll ask New York Mayor Michael Bloomberg.

What can be done about the freefall and housing crisis? The administration's point man, Housing Secretary Steve Preston weighs in. And insights and analysis from three of the best political team on television. The first hour of LATE EDITION begins right now.

(END VIDEO CLIP) BLITZER: It's 11:00 here in Los Angeles, 8:00 a.m. in Los Angeles and 7:00 p.m. in Tbilisi, the capital of the Republic of Georgia. Wherever you're watching from around the world, thanks very much for joining us for LATE EDITION. We'll get to my conversation with Senators John Cornyn and Carl Levin shortly.

But first, we want to update you on a significant developing story, the Russian invasion of the neighboring Republic of Georgia. Matthew Chance has just returned from the front lines. He's joining us now from the capital of Georgia, Tbilisi, with an update. Matthew, what is the latest?

CHANCE: Well, the latest, Wolf, is that the Georgian forces that have been locked in close combat, fierce fighting with Russian forces in that breakaway Georgian region of South Ossetia have now disengaged and they've beat a withdrawal back to their previous positions inside Georgia itself.

It's a starting turnaround on the part of the Georgians, and it comes as a result of an intense bombardment by Russian warplanes, Russian artillery attacks and an overwhelming force of Russian troops that are deployed inside Ossetia over the course of the past 36 hours. Now the Georgians have said the other reasons they have done this is to create the conditions on the ground for a cease-fire to take place. They say that their forces have stopped fighting the Russians now inside Ossetia but so far there hasn't been any response from the Russian forces.

In fact, over the course of the past few minutes, we heard some kind of explosions very close to the Russian capital and throughout the course of the day there have been attacks in and around South Ossetia and in Georgia proper by Russian artillery and by Russian warplanes striking at targets inside of Georgia.

In addition to that, there's violence being reported in another separatist area of Georgia as well, which is also backed by Moscow, Abkhazia. Fierce fighting under way there as well with separatist rebels who are backed by the Russian forces, fighting now against Georgians in their positions in that breakaway territory. So still, Wolf, a great deal of volatility across this tiny country as it continues its conflict with its giant Russian neighbor.

BLITZER: Stand by, Matthew. We're going to be discussing this and getting more from you and our other reporters on the scene right now. We're also standing by to speak with the president of the Republic of Georgia, Mikheil Saakashvili, that's coming up. But right now joining us on the phone is Alexander Darchiev, he's the charge d'affairs, the number two diplomat at the Russian Embassy here in Washington. Mr. Darchiev, thanks very much for joining us. Why is your government, your country's military attacking targets in Tbilisi, the capital of Georgia? Mr. Darchiev, I don't know if you can hear me.

DARCHIEV: Yeah, I can hear you, and so what actually is going on on the ground, yeah, I can hear you. What's actually going on the ground is precision strikes against military infrastructure in order to prevent Georgian aircraft and military attack on our peacekeepers.

BLITZER: Let me interrupt, Mr. Darchiev, but I'm not exactly clear. What do targets inside Tbilisi, which is relatively far away from the front lines in this battle -- what do targets in Tbilisi have to do with what's going on in Ossetia?

DARCHIEV: There is a military airfield there, so what we're actually doing is we are striking against legitimate military targets in order to prevent Georgian aircraft and military attack our peacekeepers.

BLITZER: The Bush administration is not very happy with what Russia is doing right now, with what the prime minister, Mr. Putin is doing, or the president, Medvedev, is doing. The deputy national security adviser to President Bush issued a statement in Beijing today, and I'm going to play it for you. Listen to this.

Let me read it to you. "We have made it clear to the Russians that if the disproportionate and dangerous escalation on the Russian side continues, that this will have a significant long-term impact on U.S.-Russian relations."

How worried are you right now, Mr. Darchiev, that this could have an enormous impact on the future of U.S. and indeed western relations with Russia?

DARCHIEV: You know, yes, what actually is going on so we are trying to enforce the adventurous Georgian leadership to peace, and the best thing our American partners could do is to tell Mr. Saakashvili, to tell him quite clearly that he could not prevail militarily, that he should be held accountable for the barbaric and treacherous attack on innocent civilians in South Ossetia, that he should be held accountable for the aggression against South Ossetia.

And the best thing he could do right now is to unconditionally, I repeat, unconditionally withdraw his troops and sign a legally binding agreement with Ossetians on non use of force. In no ways do we have plans to invade Georgia. Again, our goal is to force adventurous Georgian leadership to peace.

BLITZER: But don't you recognize Ossetia as part of the territorial integrity of Georgia, because the rest of the world does?

DARCHIEV: You know, what happened on August 7th, I mean, the aggression and indiscriminate shelling of residential neighborhoods of Tskhinvali. You know, Tskhinvali itself is completely ruined. There's 20,000 refugees, there are more than 2,000 civilians killed. There are credible reports that Georgian special forces were throwing grenades into the shelters where women and children were hiding; wounded civilians including little kids and peacekeepers were finished off by gunshots and bayonets.

In this circumstances, in this aggression, there should be no talk of South Ossetia remaining in Georgia. You know, the people there have voted several times for their independence, you know, and after what happened, after that aggression I think there should be no further talk for South Ossetia being part of Georgia.

BLITZER: So you're saying it's now what, part of Russia?

DARCHIEV: We're not saying that. That's the people for South Ossetia to decide, you know.

BLITZER: What about -- there's word now that Ukraine, another strong ally of the United States like Georgia, is siding with Georgia against Russia and in fact taking military action and blockades involving Russian vessels. What's your reaction to that?

DARCHIEV: I think it's a very unfortunate development, and I just want to make it quite clear this is not a naval blockade. We want to be sure no military equipment from abroad is being shipped abroad from the zone of conflict by sea. And again, what's going on, on the ground in South Ossetia, is a peace enforcement. We want to force the Georgian leadership to peace, and what we see right now on the ground is that Georgian troops not withdrawing but regrouping, including heavy armor and increased attacks on Tskhinvali. Mass mobilization is still under way.

BLITZER: So I take it, Mr. Darchiev, you're in no mood for a cease-fire, a return to the status quo any and to what existed a few days ago?

DARCHIEV: You know, what is right now, and with every day passed, what should be done first for -- and the best thing that Mr. Saakashvili can do, that he should unconditionally withdraw his troops, right now. And the sooner -- and the sooner he does it, the better.

BLITZER: All right, Mr Darchiev, we'll -- we're going to leave it right there, Alexander Darchiev, the charge at the Russian embassy here in Washington.

We're standing by to speak with the president of Georgia, Mikheil Saakashvili. That's coming up later, here on "Late Edition."

We just heard from the Russian representative on this escalation in Georgia, but how will all of this impact the United States?

Let's get the assessment, now, from two top U.S. senators. Democrat Carl Levin is the chairman of the Senate Armed Services Committee. He's joining us from Detroit; and in Austin, Texas, another key member of the Armed Services Committee, Republican John Cornyn.

Mr. Chairman, Senator Levin, let's start with you.

This looks like an enormously dangerous situation for the world right now, but what should the U.S. be doing, if anything?

LEVIN: Well, number one, we should be very firm that this response on the part of Russia is disproportionate to whatever the level of violence was before that. It is way out of line, in terms of what the violence was. And so it can't -- it has to be condemned and the world needs to stand against it.

But the most important thing, I think, we could do is two things, number one, is stand with the Europeans. We cannot just go out alone on this and talk and act unilaterally. We don't have much impact, I believe, in terms of our unilateral declarations, anymore, with the administration's approach to the world.

We've got to stand together with European allies. And they are condemning this action on the part of Russia, as well -- or reaction, depending upon what one's view is -- nonetheless disproportionate.

Secondly, there's a real danger of a broader regional conflict here. Because if those Russian ships leave that port in the Black Sea, and if Ukraine decides that it is not going to allow those ships back into that port because Ukraine has always claimed that as Ukrainian territory, that is a potentially much greater conflagration, involving a wider regional area.

BLITZER: And you've got two good friends of the United States, Senator Cornyn, Georgia, right now, which had hoped to become a NATO ally, as well as Ukraine, wanting to become a NATO alley, engaged in some tense moments with Russia.

Let me get your assessment. Do you basically agree with the chairman of your committee?

CORNYN: Well, I think Senator Levin is exactly right to put this at the feet of the Russians. They are clearly the superpower involved here. They can prevail militarily, but, you know, Georgia and the Ukraine, as you mentioned, Wolf, are two democracies there. And I have to say that, with Putin's authoritarian control over Russia, which seems to increase, increase; Russia seems less and like a democracy every day.

But clearly, this is for the Russians to show some restraint on. They have not, yet. And my hope would be the U.N. Security council would convene and negotiate a resolution. This is -- this is a danger to the world and could spin out of control.

BLITZER: Do you see any possibility, Senator Levin, of the U.S. getting involved militarily?

LEVIN: I do not. I think the thing we might do, however, is, if there's a request from the Georgian government, which I think there is, to help return their troops back to Georgia from Iraq, that then that request may indeed be granted, and I think that that would be appropriate that it be granted.

BLITZER: Do you agree with senator McCain, Senator Cornyn, that Russia should be kicked out of the G-8?

CORNYN: Well, I think, you know, we're not at that point yet. I think certainly not over this incident, but I think we do need to recognize Russia for what it is.

And, of course, it was the Soviet Union that invaded Afghanistan back in the late '70s, that has created so much hardship for the Afghan people, so much lack of stability in that area.

So I think, you know, Russia is a superpower. They have responsibilities of a superpower and they cannot claim that they are on any kind of equal basis or, really, legitimately threatened by Georgia, from a military standpoint, but we do need to -- we do need a resolution here, lest this thing spin of control.

BLITZER: All right, Senator Levin, very quickly, do you agree with Senator McCain that Russia should be kicked out of the G-8?

LEVIN: I think it is a reckless proposal, on his part. I think it escalates our differences with Russia, which are already real. Even President Bush, I think, doesn't agree that Russia should be kicked out of the G-8.

It's, kind of, a comment which, I think, is -- actually could lead to some very, very misleading and dangerous consequences on the part of Senator McCain.

And I would hope he would withdraw that idea. There's no support for that idea among our allies in the G-8 or even among the Bush administration folks.

BLITZER: All right. Senator, stand by, because we're going to continue our coverage of this breaking story and other important news.

We're also going to turn to what's happening in Iraq right now, some significant (inaudible) to speak live with the president of Georgia, Mikheil Saakashvili. We're going to get his take on where this conflict stands right now, this war between Russia and Georgia, escalating right now.

And later, T. Boone Pickens -- he's putting down a big bet on wind power. He's standing by live to join us as well.

And later, three of the best political team on television will assess the fallout from former Democratic presidential candidate John Edwards' now-admitted extra-marital affair. "Late Edition" continues right after this.

(COMMERCIAL BREAK)

BLITZER: Continuing our conversation, now, with the chairman of the Senate Armed Services Committee, Carl Levin, and another key member, John Cornyn of Texas.

Senator Levin, there's a lot of outrage developing, right now, over the fact that the Iraqis, thanks to the high price of oil and their large exports of oil, they are developing an enormous budget surplus, some $80 billion or so, according to the Government Accountability Office here in Washington. And they're spending very little of that on development, this even at a time when U.S. taxpayers continue spending billions and billions of dollars building all sorts of infrastructure developments within Iraq.

What, if anything, is being done about that?

LEVIN: Well, we have, in our bill, that hopefully can get to the floor, a provision which would prohibit any future American money to be spent for those reconstruction projects.

LEVIN: But what really needs to be done is the president needs to pick up the phone and to call his friend the prime minister of Iraq and tell him that they need to start reimbursing us for the ongoing costs of reconstruction.

It is an outrage, it is absolutely offensive that American taxpayers who are paying $130 a barrel for Iraqi oil, $4 a gallon at the pump for Iraqi gasoline, are also spending taxpayers' dollars to reconstruct Iraq.

Right now as we talk, we're spending money to build hotels in the economic reconstruction zone at the Baghdad Airport. Those hotels will be owned by the Iraqi government. It is an outrage. It should end, and the way to end it isn't just by passing a law. We shouldn't need to have to pass that law.

The president should call up Maliki and say this is over. Remember, when this war began, the administration promised that the reconstruction of Iraq would be paid for by Iraqi oil, and that has not been the case.

We have spent seven times more for Iraqi reconstruction than the Iraqis have, and their feeble excuse is they don't have the bureaucracy that is capable of doing - of organizing that reconstruction. That is baloney, it's unacceptable and the president can end it with a phone call?

BLITZER: What about that, Senator Cornyn? They are sitting on some $80 billion in surplus funds right now, money they could be spending in Iraq, but they are not.

CORNYN: I agree with Chairman Levin, that we need to put a limitation on the use of building -- rebuilding of infrastructure in Iraq using American taxpayer funds.

I've supported the provision that the chairman was talking about. I hope he will be able to convince Harry Reid to allow this bill to come to the floor so we can passion this into law. But the president does not appropriate any money, so I don't know what he could do. It's the Congress who appropriates money and puts limitations.

BLITZER: Let me press you on that point, Senator Cornyn, because a lot of people want the Iraqis to start reimbursing the United States for the $700 million billion or so the U.S. has already spent in Iraq. The White House says that's to going to happen. I'll play a little clip of what the deputy White House press secretary said the other day.

(BEGIN VIDEO CLIP)

TONY FRATTO, DEPUTY WHITE HOUSE PRESS SECRETARY: The reimbursement to the United States is that we will have a long-term ally that will stand with us in this very critical part of the world.

(END VIDEO CLIP)

BLITZER: Should the Iraqis reimburse American taxpayers for some of the funds?

CORNYN: I think that ought to be part of the debate on the Defense Authorization Bill that I hope we'll take up in September. But I think we need to be careful here because we want Iraq to succeed as a self-governing, self-defending democracy in the Middle East which it looks well on its way to doing and becoming. But I would say that we wouldn't even be having this discussion if Democratic leaders in the United States Senate had been successful imposing an arbitrary timeline for withdrawal regardless of circumstances on the ground.

BLITZER: I want to pick up that point with Senator Levin, should the Iraqis, Senator Cornyn, at least be selling oil to the United States at a discount from the going international rate?

CORNYN: Iraq is a sovereign country, Wolf. That's what we have fought to help them attain, and they will become, I believe, a self- governing democracy and ally of the United States in the Middle East, the first Arab country to become that. And that is a tremendous accomplishment.

BLITZER: So the answer is?

CORNYN: Well, I think we should not be stealing basically what is theirs, and I don't think that's why we've -- why we've expended so much blood and treasure just so we can take something that's theirs.

BLITZER: So they shouldn't be giving the U.S. a break.

CORNYN: We shouldn't be taking something that's theirs or insisting that they shouldn't get value for.

LEVIN: Wolf, I've got to answer one part of that.

BLITZER: Go ahead.

LEVIN: We tried to get the Defense Authorization Bill to the floor a week ago. There was a Republican filibuster against the motion to proceed which Harry Reid made. We were not able to get enough Republican votes to bring a defense bill to support our troops to the floor of the United States Senate because it was the 82nd or so Republican filibuster that's existed.

And as far as stealing from Iraq, my gosh, they are taking from us with this incredible price of oil, and at the same time we're being foolish enough to spend our taxpayers' money to build hotels that the Iraqi government are going to own.

That is not stealing from them, that is foolishness. We are a sovereign country. We can decide either legislatively which shouldn't be necessary but we're going to do it. If we can get by the Republican filibuster or the president can simply call up his buddy, the prime minister of Iraq and say we must end this. The American taxpayers are offended by the idea of paying $4 a gallon for Iraqi oil at the same time using taxpayers' money to build Iraqi hotels for the Iraqi government.

BLITZER: Senator Cornyn, there are a lot of Americans who feel that the Iraqis are playing the U.S. for suckers.

CORNYN: Well, I think, you know, we've fought long and hard to get to this position where now there is a hope that Iraq can govern and defend itself, Wolf.

If we had simply quit as Harry Reid and Nancy Pelosi and Senator Obama wanted us to do early on, we wouldn't even be having this discussion. There wouldn't even be the hope of a self-governing democracy in an Arab world in the Middle East this. This ought to be a subject of negotiations between two sovereign powers. I agree with Senator Levin that Iraqis need to bear more financial responsibility. That's why I hope that we do get that provision passed in early September.

BLITZER: Senator Levin, go ahead and respond to the charge that if you and others like Senator Obama, for example, would have had your way, this discussion right now about Iraqi oil surpluses and what to do with it wouldn't even be a subject for discussion?

LEVIN: Well, if we had had our way, we would have had a reasonable timetable for the redeployment of most of our troops which would have put some pressure on the Iraqi government to do what they are not doing, which is essential to end the conflict in Iraq and that is to work out a political settlement among themselves.

They were supposed to have elections which is a critical part of that settlement on October 1st, and instead of doing that, they again are doing nothing to resolve these key political differences on Iraqi elections.

BLITZER: Senator Levin, there has been a very dramatic drop in the number of U.S. troops killed and injured and there has been --

LEVIN: There has been.

BLITZER: There has been progress on the military side.

LEVIN: There has been on the military side, but the purpose of the surge was to give the Iraqis the breathing room, that was the argument, so that they could work out their political settlements.

They must take political responsibility, economic responsibility and military responsibility for their own country. They are not doing that, so while the violence has been reduced, thank god, it's not going to stay that way unless there is a political settlement. And instead of reaching those agreements on how to divide their resources, and on keeping their promise to have elections on October 1, which are so essential to a political settlement, they are now not doing what they promised us they would do. We've got to keep the pressure on the Iraqis.

BLITZER: Very quickly, very quickly, go ahead.

CORNYN: Wolf, in fairness, the Iraqis have met 15 out of the 18 timelines that we've imposed for them, benchmarks. Muqtada al-Sadr has ordered his Mehdi army to disarm, and we've seen Iraq under Prime Minister Maliki take the initiative in Basra and elsewhere with Iraqis leading the fight and Americans in the background providing counseling and guidance so I don't think it's fair to say that here hasn't been tremendous progress. It just flies in the face of the facts.

BLITZER: We're going to leave it there, senators. A good serious discussion, but we'll have both of you back, no doubt about that. Thanks very much for joining us.

CORNYN: Thank you.

BLITZER: And when we come back, we'll speak with the housing secretary, Steve Preston, about the meltdown in the U.S. housing market, what the government is trying to do about it, information you need to know.

And we're also standing by to speak live with the president of the republic of Georgia about the war that's going on right now between Georgia and Russia. Stay with us. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: The fighting is escalating between Russia and its neighbor in Georgia. We're watching the story very, very closely. We're standing by to speak live with the president of Georgia, Mikheil Saakashvili. That's coming up. We heard earlier from a representative of the government of Russia.

There's other news we're following right now, including news here in the United States. Across the country, homeowners are simply terrified, a lot of them at least, millions of them, by the rise in the foreclosures. They are losing their homes, as well as the drop in the value of their homes. Those were some of the topics I discussed just a little while ago with the Housing Secretary Steve Preston. We spoke here.

(BEGIN VIDEOTAPE)

BLITZER: Mr. Secretary, thanks very much for joining us.

PRESTON: Thank you.

BLITZER: Let's talk about foreclosures right now. This is the American dream, owning a home, but for a lot of people right now, millions of people, they're worried about losing their homes right now.

In the last quarter almost 800,000 homes were in the process of being foreclosed. And that number seems to be going up. Is it going up?

PRESTON: Well, it has been going up this year. And it's something we're terribly concerned about. And so we're taking action through HUD at the FHA to help those homeowners who are facing foreclosures.

We are very interested in helping people who are in a home, want to stay in that home, and can afford the right mortgage. So what we are doing is focusing very hard on trying to get people to go to their banks, to go to mortgage counselors, and come to us to see if we can put them in an affordable, stable mortgage.

BLITZER: Because I want to get some practical advice for our viewers out there who are deeply worried about losing their homes. But where are we right now in terms of this housing crisis in the United States? Are we at the beginning, the middle, or near the end and see some light at the end of the tunnel? PRESTON: Well, I think we're pushing through the middle right now. We still have very high inventories. If you look at home inventories, they are generally around 10.5 to 11 months...

BLITZER: You mean there's a surplus of homes on the market out there, and not enough customers.

PRESTON: Yes. Typically you'd see sort of a six- or seven-month inventory. We're 10.5 or 11. So we need new homebuyers to come back into this marketplace. And we have to work hard to stem the tide of foreclosures so we don't have more of those homes coming into the inventories.

BLITZER: Because people are not only worried about losing their homes, those who are still fortunate enough to own their homes, they're worried about the plummeting value of their homes, the prices going down, what, 16 percent of the value -- in 20 major metropolitan areas, only in the past year has the value of these homes gone down.

And in parts of the country, like in Vegas or in Arizona, in Florida, it's even worse.

PRESTON: That's true. It's a phenomenon across the country, but it is -- it's heavily concentrated. The value declines are much more concentrated in sort of Florida, Nevada, Arizona and California.

So there are parts of the country where the decline is much more moderated. And as a result, some of the policies coming out are focused on some of those high foreclosure areas more heavily.

BLITZER: Because -- and where do we stand in terms of the value? Because we always know there are cycles. The value of homes go up, go down, but then they recover. Where is the recovery right now in terms of the value of people's homes?

PRESTON: Well, I think -- everybody thinks that we're still -- we're going to have some rough waters...

BLITZER: Are we still in the middle of this...

(CROSSTALK)

PRESTON: I think we've got a period of time. But we actually...

BLITZER: So the fourth or fifth inning in terms of a baseball analogy?

PRESTON: I'm hoping we're pushing beyond the fourth, yes, maybe fifth, sixth. But I think there are a couple of important things to note. First, there are numbers for these around the country that have shown stability or actually improvement in home values.

Also just last week the number of contracts on home sales actually went up. And we haven't seen that type of encouraging sign for a while. So there are indications out there that we're pushing ahead. BLITZER: Who was asleep at the switch or who was to blame for this housing crisis that has plagued us now over these past couple of years?

PRESTON: You know, I think all of the factors that have gone into these issues have been multifaceted. I think there was confusion at the closing table as to what people were getting into. I think you had builders overbuilding in many of these markets, and as a result, needing to sell that inventory and doing so aggressively.

And I think at the end of the day you had mortgage instruments that were poor financial risks that ultimately landed in the hands of investors that they probably should never have bought.

BLITZER: With hindsight, could the government have done more in terms of regulation, in terms of oversight to make sure this didn't get to this stage where you had these two giant mortgage lenders, government-backed, Fannie Mae and Freddie Mac, some say that they could be in deep, deep trouble with enormous ramifications for American taxpayers?

PRESTON: Well, I think if you look at the path forward, one of the things we're working very hard to do right now is provide greater regulation at the closing. And by doing so what we would do is provide better information to borrowers when they enter a mortgage. What am I getting into? Is my rate going to go up? What are the terms here?

BLITZER: So the federal government is going to get more involved now as a result of this crisis?

PRESTON: At HUD, we were working on reforming the closing process to make it more understandable and clearer for borrowers. In addition...

BLITZER: So when somebody buys a house, they know exactly what they're getting into?

PRESTON: They know exactly what they're getting into. I think the industry has actually pulled back so dramatically on its own that I think by the time the private market comes back here, you will see a greater degree of quality and diligence in the process.

Right now, if you look at new mortgages in our country, yes, almost 90 percent of them are either supported in some way by Fannie, Freddie, the federal home loan banks, or FHA at HUD. So the government is really in some way enabling the mortgage sector across the board right now.

And we need to migrate back toward more of a -- toward a deeper private market.

BLITZER: Because the president just signed a new housing bill into law, passed by Congress, Jim DeMint, the senator, Republican from South Carolina, he hated it. He said this. He said, "For the first time in our nation's history the federal government will take ownership of private mortgages and give local and state governments billions to buy and flip homes. We are forcing taxpayers to be liable for the worst and riskiest loans and allow executives at Fannie Mae and Freddie Mac to privatize their profits while socializing their losses."

Do you agree with him?

PRESTON: Well, there's a lot packed in that comment. I think there are things about the housing bill we liked a lot. We thought it was absolutely critical to put in place a world class regulator for Fannie and Freddie.

They have $5 trillion worth of securities in the market. They are absolutely essential to getting affordable mortgages to homeowners in our country. Given the situation in the marketplace, I think we felt it was important to provide a backstop.

BLITZER: Because he was originally opposed, the president.

PRESTON: He was opposed to it. And I understand his sentiments. They're very important. But when you had these institutions that are that massive in our marketplaces, and that essential to Americans getting mortgages, somehow you have to come in there and instill confidence in those instances.

BLITZER: So you're saying the president had no choice but to go ahead?

PRESTON: I think the president was very interested in stabilizing and showing confidence and stability in these institutions, and then providing in place a longer-term underpinning through this regulator to make sure that that confidence goes well into the future.

BLITZER: We're out of time, but very quickly, people out there who own a home and they're worried about losing their home, what, if anything, can they do as far as HUD is concerned, your agency, what can they do for help?

PRESTON: We have thousands of counselors out there. They are terrific in sitting down with people, helping them understand if they should restructure their mortgage. If they can, they'll take -- they'll go to their bank or their mortgage lender with them and their papers.

So call a mortgage lender, get to us through hud.gov. You'll find somebody who can help you. Or go directly to your lender.

BLITZER: And this is a free service?

PRESTON: It's a free service, people are out there actively restructuring these mortgages today. So don't wait. If you have an issue, get out there, talk to a counselor or talk to your bank.

BLITZER: Hud.gov, is that what you said?

PRESTON: Hud.gov.

BLITZER: Mr. Secretary, thanks very much for coming in.

PRESTON: Thank you.

(END VIDEOTAPE)

BLITZER: And coming up next, the man noted for speaking his mind about the energy crisis in the United States. The billionaire oil man T. Boone Pickens, he's coming in. Then at the top of the hour, two others who have been known to have very strong opinions, Pennsylvania Governor Ed Rendell and New York Mayor Mike Bloomberg. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: For the past few weeks, at least if you lived here in the United States, it's been hard to avoid this commercial.

(BEGIN VIDEO CLIP)

PICKENS: I'm T. Boone Pickens. I've been an oil man my whole life, but this is one emergency we can't drill our way out of, and I have a plan.

(END VIDEO CLIP)

BLITZER: Let's discuss that plan and more. T. Boone Pickens is joining us here on LATE EDITION. Thanks very much for coming in.

PICKENS: Sure, thank you.

BLITZER: Why did you decide at this stage in your life, you're 84-years-old.

PICKENS: No, no, no, 80.

BLITZER: 80-years-old, I'm sorry, 80-years-old is a lot less than 84-years-old. You're 80-years-old, you're still a young man. You've got billions of dollars, I don't know how many billions, but plenty of billions and now you're spending a lot of money to try to get America weaned off its addiction to foreign oil.

PICKENS: Wolf, I became convinced that I was the only person that really understood the energy situation in the United States.

BLITZER: The only person in all of the United States.

PICKENS: Well, the only one willing to speak up. A lot of people agree with me, about 95 percent of the people coming on to my Web site, pickensplan.com, that I've had over 4 million hits on that, that agree with me. And what it is is we're dependent on foreign oil. It's 70 percent now of our imports and we're spending $700 billion a year. We can't afford to do is.

BLITZER: Have you seen any impact from these commercials that you're running, the work that you're doing that people are beginning to appreciate what's going on?

PICKENS: Yes, absolutely. I've made two town hall meetings now, in the wind quarter.

BLITZER: When you say the wind quarter, you mean sort of in the plain states, in the middle part of the United States from Texas going up to Canada. There's an area there that you say is really conducive to tapping wind power as a source of energy?

PICKENS: And it's being developed but too slowly. But Topeka, Kansas, was one town hall meeting and the other was in Colorado. We've had huge turnout. They fill up the hall an hour before I get there. I'm telling you the truth, the absolute truth and they turn people away.

BLITZER: What about the response from the federal government, because if there's going to be any action along the lines that you're advocating to use solar and wind and other alternative sources of energy in addition to oil and natural gas, the government is going to have to get involved.

PICKENS: They sure are, and I've had great, great opportunity to talk to them.

BLITZER: Democrats and Republicans?

PICKENS: Both of them.

BLITZER: The legislative and the Executive Branch?

PICKENS: It's totally non-partisan, and that's the way I did -- I'm out of this campaign. I'm not supporting --

BLITZER: But you're a Republican, you've always been a Republican.

PICKENS: I'm not doing anything for McCain in this campaign.

BLITZER: Really?

PICKENS: No, I'm not..

BLITZER: Because the last time in 2004, you were actively campaigning for Bush against John Kerry, and you were involved in that swift boat controversy.

PICKENS: That's so far back, I don't even remember it.

BLITZER: So that's gone?

PICKENS: That's gone.

BLITZER: So this time around you're not going to be working for either of them.

PICKENS: No, neither one. This is non-partisan. I'm paying my $58 million to inform the American people and Washington on what our energy problems are. And they are huge, and we can't go any further under the operation that we have now, and we can solve it. I do have a solution.

You're going to have to get to the wind, and you're going to have to get to the solar, and both of them have to be used. They are fabulous resources for this country.

Second, we have an abundance of natural gas, plenty of natural gas to fuel -- I would prefer to fuel trucks instead of vehicles like yours and mine, but a lot of people -- see, I have a Honda GX, which is natural gas. It's a great car, but it's not where I'm going with this idea. The idea goes to the trucks, is where it goes to.

BLITZER: So you use that natural gas, you use the solar, you use the wind, but all that's going to take a long, long time to get going, isn't it?

PICKENS: No. I mean, you have the technology for all of it. All the technology is in place. The government will have to move quickly to give corridors to transmit the power out of the wind corridor.

BLITZER: Out of the middle part of the United States.

PICKENS: That's right. They will have to give corridors to move that.

BLITZER: How long will it -- will that take realistically to build the infrastructure, to get the authorization to use wind as a significant source of energy in the United States?

PICKENS: I would say five years, five years, but you're going to have to go like Eisenhower did with the interstate highway system. They're going to have to say this is an emergency, and there is no question it's an emergency. It's a crisis.

BLITZER: You mean in terms of taking land and just making it part of this natural --

PICKENS: Give the corridors through there, pay the people for the land, but it has to be done.

BLITZER: Here's what Senator Obama says in a new ad on this whole issue of energy. I'm going to play a little clip for you.

PICKENS: OK, good.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: On gas prices, John McCain is part of the problem. McCain and bush support a drilling plan that won't produce a drop of oil for seven years. Fast-track technology for alternative fuels, a $1,000 tax cut to help families as we break the grip of foreign oil, a real plan and new energy.

(END VIDEO CLIP)

BLITZER: Now, I know you've had a chance to study both of these plans, the McCain plan, the Obama plan. You're a Republican, I assume you're going to vote for McCain, but what do you think of their respective proposals?

PICKENS: Well neither one of them are a plan to do anything soon. Mine will do it now. The natural gas is available. The technology is available. See, there are 8 million vehicles in the world on natural gas. Only 142,000 in the United States. That's plenty -- the technology is there.

BLITZER: Have you had a chance to brief or speak with these two presidential candidates?

PICKENS: No, but I think it's coming up pretty soon though.

BLITZER: Who are you going to see?

PICKENS: Which one? I think both of them.

BLITZER: You'll see both of them?

PICKENS: I think I'm going to have an opportunity to talk to both of them.

BLITZER: And when you speak to them, what will be the first thing, the most important thing, the message you're going to give Senator Obama and I assume it will be the same message for Senator McCain?

PICKENS: It has to be the same message, but the way I see it, I would be speaking to the commander in chief, I would be the general. I would explain to them what the problem is and I would give them the solution. And then they would ask the questions of me to see if I know what I'm talking about, and I know what I'm talking about.

And this can be accomplished. The gas is here, the natural gas. See, General Motors makes 19 vehicles for natural gas, but none in the United States. They are all in South America and in Europe. And then three months ago Gazprom, the Russian oil company announced that they were going to do natural gas fueling stations all over Europe, so the Iranians announced two weeks --

BLITZER: What you're saying is the time has come for natural gas in vehicles in the United States.

PICKENS: Absolutely, but see the Iranians are switching over from gasoline to natural gas and then selling the oil to the world market.

BLITZER: T. Boone Pickens, you have a tough mission ahead of you, but let's hope it works if the U.S. can wean itself off of the addiction from imported foreign oil, that would be good for the country. PICKENS: It has to work. Do I have one more minute?

BLITZER: Go ahead. PICKENS: OK, that $700 billion that I think I can change that $700 billion.

BLITZER: The amount that the U.S. is spending, sending abroad to import oil?

PICKENS: I think I can get the $700 billion down by $200 billion in five years, and I think I can get 40 percent of it down in 10 years. If we do that, that would create jobs here in this country, and we would have the money here, profit that would be made and taxes would be paid and the economy would move forward. We wouldn't have that huge outflow of money to somewhere.

BLITZER: Thanks very much for coming in.

PICKENS: Thank you.

BLITZER: And coming up, we're going to get a live report on the latest, what's going on in Beijing. President Bush is attending the Olympic Games right now.

And later, the governor, Ed Rendell of Pennsylvania and the New York Mayor Michael Bloomberg, they're standing by live. We're going to talk about the race for the White House among other subjects. Stay with us. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "Late Edition." President Bush is attending the Olympic Games in Beijing this weekend. That has not meant, though, he's been out of touch with the escalating fighting between Russia and the neighboring republic of Georgia.

Let's go to CNN's John Vause. He's joining us, live, from Beijing with on that and what else is going on, including the murder of an American, over the weekend, in Beijing.

What's the latest, John?

JOHN VAUSE, CNN CORRESPONDENT: Well, U.S. President George Bush did raise the issue of the murder with China's president, Hu Jintao. Hu Jintao extended his condolences to the American people, and President Bush did, in fact, thank the Chinese president for a speedy response to the murder and also for promising a thorough investigation.

Mr. Bush, today, was not talking publicly about the crisis in Georgia. Instead, after attending a state-sanctioned church, he spoke about the need for religious freedom.

However, a senior White House official, today, did say that, if this current Russian military campaign continues in Georgia, it will have a long-term, lasting, significant impact on U.S.-Russian relations.

Also today, White House spokesperson Dana Perino said that the president holds -- believes that both sides should stand down, but the president does hold the Russians accountable for what he calls a disproportionate response.

Tonight, President Bush did speak with French president Nicolas Sarkozy, who is also president of the E.U. right now.

Officials say both men agree on the need for a cease-fire, for a disengagement, and also for the need for Russia to respect Georgia's geographical integrity.

The Georgian government, though, has reportedly now said that its troops are observing a cease-fire, and also that it is ready to negotiate with the Russians.

The White House says that is the next key test in all of this, the Russian response to that Georgian offer. Wolf?

BLITZER: All right, thanks very much, John. We'll be checking back with you.

Lots more news coming up here on "Late Edition," including a reality check from three of the best political team on television. We're standing by to hear their thoughts on the political fallout from the John Edwards scandal, among other subjects. This is "Late Edition," the last word in Sunday talk.

(COMMERCIAL BREAK)

BLITZER: This is LATE EDITION, the last word in Sunday talk.

(BEGIN VIDEO CLIP)

BLITZER: In the small nation of Georgia, Russian forces are attacking. We'll have the latest on this dangerous situation. In the United States, the economy is issue number one.

OBAMA: We're going to invest $150 billion over the next decade and leverage billions of dollars more in private capital to harness America's energy and create five million jobs in the process.

MCCAIN: What we need is an economic strategy, an economic surge, a successful economic surge to keep jobs here at home and create new ones. BLITZER: Which candidates' plan will really work? We'll ask the governors of two battleground states, Republican Charlie Crist of Florida and Democrat Ed Rendell of Pennsylvania.

BLOOMBERG: With Hillary back on the job, you ain't seen nothing yet.

BLITZER: We'll talk with New York City Mayor Michael Bloomberg about Senator Clinton's future, the presidential race, and much more.

OBAMA: It's great to be back in Hawaii.

BLITZER: And Barack Obama may be on vacation, but John McCain isn't taking time off, and neither are we. Insight and analysis on the race for the White House from three of the best political team on television. The second hour of LATE EDITION begins right now.

(END VIDEO CLIP)

BLITZER: Welcome back to LATE EDITION. We'll get to our conversation with Governor Rendell and Mayor Bloomberg in just a moment. But we're following breaking news involving the conflict between Russia and the neighboring republic of Georgia. Richard Roth is standing by, live at the United Nations today where the Security Council is meeting in emergency session. Richard, I know the passions are intense right now. What's the latest?

RICHARD ROTH, CNN SR. U.N. CORRESPONDENT: Well, the latest is the Georgian ambassador has issued a very dramatic, passionate appeal to the members of the United Nations Security Council, asking for diplomatic and humanitarian intervention. Quote, "to stop a Russian aggression and occupation in Georgia and those breakaway areas of Abkhazia and South Ossetia." The United States ambassador to the U.N. Zalmay Khalilzad is currently speaking to the Security Council, saying there's been a dangerous, dramatic development with Russian expansion, military operations against Georgia, and there is grave concern here about development in on Abkhazia, which there is filled with people who are more closer to Russia than Georgia, though it's Georgia territory, though highly disputed.

The Security Council has been unable, Wolf, to come up with even a statement about the fighting over the last three days. The United States very worried. There's even anger there that there will be a resolution move against Russia. But because it has a veto, Moscow would certainly kill that resolution. Wolf?

BLITZER: Is there a sense that if the Russians go ahead and veto any strong resolution, obviously if the Security Council, if the members want to condemn Russia for its military actions in Georgia, what happens then? Is the U.N. Security Council sort of just without any significant authority or power right now?

ROTH: That's what would happen and has been happening since Russia has been very angry about any statement that would point the finger at Moscow for the flare-up in fighting. Moscow has blamed Georgia for biting off more than it could chew. All hope rested on diplomat elsewhere in the union and direct appeals. But the Georgian ambassador just said to the council that the Russia president failed to even talk to the Georgian president when he was appealing for some type of cease-fire.

BLITZER: We're hopefully going to be talking this hour with the president of Georgia, Mikheil Saakashvili. We're standing by live for that. All right, thanks very much. Richard, we'll get back to you. You'll monitor that emergency meeting of the Security Council.

Let's continue with what's going on on the ground now, right now in Georgia, and the move by Russian troops into Georgia. Matthew Chance has been on the front lines. He's now in Tbilisi. He's joining us live with an update on the military battle. What's the latest, Matthew?

CHANCE: Well Wolf, the latest is that Georgian forces have moved, active site, the area where they've been in the most intense conflict with Russia over the course of the past several days. They've done that because of two reasons.

One, in the hope that it will create the situation, create the circumstances on the ground for a cease-fire to come into force. That hasn't happened so far. The other reason they say, Georgian officials, that they made this order, they made this withdrawal at this time is because they've come over the course of the past 24 hours under such intense military pressure from the Russians, a ferocious bombardment by Russian artillery, war planes conducting air strikes again forces in South Ossetia, as well as others, against other targets around Georgia as well.

And I think the feeling in the Georgian government was well, enough is enough. We cannot confront the Russians anymore and we have to go back to the position we were in before these hostilities, you know, kind of started off. The hope being that that will lead to a cease-fire. But at the moment, there's still very much -- no cease- fire in place and there is still reports from around the country of Russian war planes striking at targets across Georgia, Wolf.

BLITZER: Matthew Chance, stand by. We're going to be getting back to you as well. And I said, we're hoping to speak later this hour live with the president of Georgia, Mikheil Saakashvili. Stand by for that.

In the meantime, let's turn to some other news. Want to speak with the Republican governor, Charlie Crist of Florida. That's coming up in a little while. He's by all accounts on the short list for vice presidential running mate for John McCain.

But right now we're joined by two other influential politicians. The New York Mayor Michael Bloomberg. He's an Independent, he's joining us from our studios in New York. And joining us in Philadelphia, the Pennsylvania Governor Ed Rendell. He's a Democrat. Thanks, gentleman, very much for coming in.

I want to get to presidential politics and all that in a moment, but I know the two of you, a Democrat, an Independent. Both of you are teaming up with a Republican, Arnold Schwarzenegger, the governor of California to try to do something about the nation's infrastructure right now. And Mayor Bloomberg, I want you to give us the bottom-line assessment. Why are you doing this? What's going on?

BLOOMBERG: Well, the country's stopped investing in infrastructure. If you go back, Jefferson invested in canals, opened up the West. Roosevelt invested in public works, brought us out of the Depression and gave us the infrastructure we needed for decades. Eisenhower built the interstate highway system. That carried this country.

Since then, public works have become pork barrel things. And Ed Rendell really deserves all the credit for this. Arnold Schwarzenegger and I are just so thrilled to be joined him. But it's his genius, it's his drive that's gotten us going. We've got to make Washington understand that if we don't make the investments now, no matter how tough they are, no matter how politically popular they may be, we're not going to have a society for our kids and grandkids.

BLITZER: Here's some statistics we've compiled, Governor Rendell. Nearly half of all the bridges in the United States will exceed their life span in 15 years. One in four of our bridges is rated as deficient. More than $140 billion will be needed simply to repair these bridges. And rising costs prevent the states, like Pennsylvania, from maintenance and construction.

Here's a question I asked Senator Levin and Senator Cornyn just about this just a little while ago on LATE EDITION. At a time when the U.S. is in such desperate financial straits, needing to repair infrastructure like roads and bridges, and the U.S. taxpayer is still spending billions in Iraq to do infrastructure development there and they have a huge oil budget surplus, $80 billion sitting in banks right now, what does that say to you?

RENDELL: Well, it says to me, and I don't mean to be political, but what Senator Obama's been saying is correct. We are robbing our future by spending the amount of money we're spending in Iraq and letting the Iraqis off the hook.

When that figure came out, it's a disgrace. It's an absolute disgrace. We have challenges -- the mayor is absolutely right. We're in danger of becoming a second or third-rate economic power if we don't turn our attention to our infrastructure. And it's got to be done. It's an economic issue, it's a public safety issue.

Just a week and a year ago, you saw what happened in Minnesota., Pennsylvania leads the nation in structurally deficient bridges. I've gone from $250 million a year to over $1 billion a year and we're barely making a dent. We can't get there without smart, federal intervention and good federal money distributed in the right way, not politics, not pork barrel.

BLITZER: I know there are a lot old bridges in New York City, gone over them many times, Mayor Bloomberg. BLITZER: They seem to be pretty sturdy right now, but I want your reaction to what a lot of Americans see as an outrage, that American taxpayers are spending billions and billions of dollars on bridge reconstruction in Iraq, but -- at a time when that funding could be used right here in the United States.

BLOOMBERG: Well, I don't think it's an either/or. We may have foreign policy concerns and obligations overseas. I'll leave that to others.

What we have to do is to focus on our domestic infrastructure. And in New York, we've reached into the taxpayers' pockets and we've been fixing up all the bridges with our own money. But we can't continue to do at. And other states may not have the wherewithal, if even they had the will, to go and do it.

And it's not just the bridges that are substandard and getting worse, while we're not maintaining them; we aren't building the next set of bridges for an increased population and a different kind of technology and different living places and patterns and transportation kinds of things.

It's our airports that can't handle the number of flights. It's choking our economy. You can't have a worldwide economy unless people can come and go.

BLITZER: Well, Mayor Bloomberg -- and I'll let Governor Rendell weigh in on this in a second. I know what his answer's going to be. I'm not sure I know what your answer is going to be.

When you look at these two presidential candidates right now, who's got a better plan dealing with the nation's infrastructure?

BLOOMBERG: Well, I think they've both said that we have to have better infrastructure, and they've basically left it at that. It's a promise of motherhood and apple pie.

(LAUGHTER)

What I've wanted to hear from both of them is how they'd going to pay for it, what we can't have if we invest the money in this -- that's a hard question to answer, but one the public has a right to know -- and how they'll bring Congress along.

Because, in the end, it is a Congress, both sides of the aisle, as well as both ends of Pennsylvania Avenue, that have to be together. And Congress, in some senses, is even more important. A president can provide a vision, but it's Congress that's got to vote the money.

BLITZER: We're going to speak to Governor Charlie Crist in a little while, the governor of Florida. I know he'll have a different answer. But what I hear the mayor saying, Governor Rendell, is he's still not satisfied with what your candidate, Senator Obama, is proposing.

RENDELL: Well, Senator Obama has proposed an infrastructure bank funded with $60 billion of public/private money. And that's a good start. And the infrastructure bank's important because it gets it out of pork barrel politics, and has a group of experts determine which are the most cost-effective and the most needed federal projects.

So I think Senator Obama's idea is a good idea. It doesn't go far enough.

Interestingly, Wolf, the $10 to $12 billion a month we're spending in Iraq comes to about $140 million a year. The American Society of Civil Engineers says we could repair all of the American infrastructure, all of the things that Mayor Bloomberg talked about, water and waste water systems, passenger rail, freight rail, for bout $1.6 trillion, in one shot.

That $10 billion to $12 billion a month, $144 a year -- that's the debt service if we had federal capital budget. That's the debt service on a $1.6 trillion infrastructure repair program over the next five years. And that's going to put more people to work than anything Washington's done.

BLITZER: The recent CBS news poll, Mayor Bloomberg, asked independent voters for their preferences in the presidential race right now.

Are you surprised that these two candidates are, sort of, equally dividing the independents out there?

BLOOMBERG: Wolf, I'm not surprised at all. I think both candidates really are principled people who have experience and want to take this country forward.

Both have ideas, but I don't think the public understands where either is going, or at least how they're going to get us there.

And I thought Ed's right. Obama's $60 billion bank is a great idea, but how are you ever going to get Congress to give up the right to bring home goodies to their state...

(LAUGHTER)

... or to their districts? That's the great challenge.

And one of the main things the president has to do is to lead Congress. And if you're going to vote for one candidate or another, one of the things that should be at the top of your checklist is, who would be the better person to do that?

And I don't know the answer to that. I'll make my decision before I get to the voting booth...

(CROSSTALK) BLITZER: But Senator McCain -- Ssenator McCain, Mayor Bloomberg, he says that this pork barrel spending with, the so-called earmarks, that's right at the top of his agenda. And he says he'll veto any spending bills that has this kind of spending in it.

BLOOMBERG: Well, I think John McCain has said this for a long time. He's been on the right side of this issue. But saying you're going to veto a bill is easy. What do you do when the things you don't like is tied to something that we have to have?

And that's the typical thing that Congress does. They keep the president from being able to pick and choose which things to veto and which things to not veto.

And we've got to find a ways to get out of that paralysis that this partisanship in this country has forced on us. Other countries are investing and building infrastructure, when we are not.

And I'll tell you one quick story. I had dinner with the ambassador of the United Nations from one of the emirates, and all he talked about at dinner was how his country was making investments so they won't be dependent on foreign oil when the oil in their country runs out.

BLITZER: Good point.

Governor Rendell, as a former chairman of the Democratic Party and as a former supporter of Hillary Clinton, now a supporter of Barack Obama, how do you feel about this notion of having a formal role call at the Democratic convention in Denver, in a couple of weeks, in which Hillary Clinton's name would be put in nomination?

RENDELL: Well, I think that's for Senator Clinton and Senator Obama to work out. And whatever they work out is satisfactory to us.

As a Clinton supporter, I think most of us, 95 percent of us, have made the transition, and we're anxious -- enthusiastically supporting Senator Obama, no ifs, and buts about it.

But would a roll call be productive? I'm not sure. Would it be destructive? Absolutely not. We all know Senator Obama will win the roll call.

BLITZER: She says it would be a catharsis?

RENDELL: Well, it might be a catharsis for some of us. I mean, in Pennsylvania, as you know, Wolf, we worked pretty hard to win the state for Senator Clinton, but we'd be just as happy to cast all of our votes for Senator Obama. Whatever the two of them decide, we'll stick with.

BLITZER: We're out of time. But a quick question, Mayor Bloomberg, have you decided who you're going to vote for?

BLOOMBERG: No.

BLITZER: I didn't ask you who you were going to vote for. I just asked if you'd decided who you're going to vote for?

BLOOMBERG: I heard your question.

(LAUGHTER)

BLITZER: And so you're still undecided?

(LAUGHTER)

RENDELL: I have, Wolf.

BLITZER: I know you have, Governor.

(LAUGHTER)

Thanks very much.

All right, guys. Good luck with the infrastructure. The country needs all the help it can get right now.

RENDELL: Thanks, Wolf.

BLITZER: Thank you.

And straight ahead, we'll get a different perspective, the Florida governor, Charlie Crist. He announced a new partnership this week as well. We'll talk about that and a lot more.

And later, three of the best political team on television will break down all the ups and downs of this week on the campaign trail, including the political fallout from the John Edwards scandal. "late Edition" continues right after this.

BLITZER: My next guest is widely thought to be on the so-called short list to join John McCain on the Republican ticket. Is he? Let's ask him. The Florida Governor Charlie Crist is joining us right now from White Sulfur Springs in West Virginia, where the nation's governors are meeting. Governor, what's the answer?

CRIST: Well, I don't know the answer. I'm just happy to be the governor of the fourth largest state in America, where your mother happens to live. It's a state of almost 20 million people and it's great to always be in Florida.

BLITZER: I'm going to move on, but quick question. Have they started a formal vetting process with you? In other words, are they asking for documents, IRS returns, stuff like that?

CRIST: I can't discuss the process, Wolf. I hope you appreciate that.

BLITZER: I'll take that as a yes.

CRIST: You take it however you want, I can't discuss the process.

BLITZER: OK, fair enough. All right, let's talk about some of the important issues in the race for the White House right now. Probably the economy, energy, issue number one, as we've been saying. Listen to Senator Obama, because he's been very critical of the man you want to be the president of the United States, John McCain.

(BEGIN VIDEO CLIP)

OBAMA: Instead of offering a comprehensive plan that will lower gas prices, the centerpiece of his entire energy pan is more drilling. Now, Bush -- George Bush's own energy department will tell you that you will not see rising -- you won't see a drop of oil from offshore drilling for seven years.

(END VIDEO CLIP)

BLITZER: Like Senator McCain, like President Bush for that matter, governor, you've recently changed your opinion and you now support offshore oil drilling off the coast of Florida. Why did you change your mind?

CRIST: Well, the facts have changed, Wolf. When you're facing $4 a gallon at the pump, you have to be sensitive to what the people of Florida and in Senator McCain's case, the people of America are dealing with. It's an energy crisis, there's no question about it. And from a Florida perspective, so long as it's far enough, clean enough and safe enough, we're in favor of looking into it in order to alleviate the problem at the pump.

Senator McCain understands that. This is a guy who has a common sense approach. It's all of the above. It's not just drilling, as well, but he talks about solar, wind, nuclear, which is very important. Senator Obama opposes nuclear. It's clean, it's powerful, and it's safe. These are the kinds of things that Senator McCain understands, to help the American people, to get us off our dependence on foreign oil. I saw you had T. Boone Pickens on earlier. We're transferring $700 billion of wealth to the Middle East, to some people who don't even like the United States. We could be keeping that money at home, helping us with infrastructure, helping the American family keep more of the money that they earn in their pocket and helping our country be as strong as she possibly can.

BLITZER: So I take it, governor, you're ready to start seeing a whole bunch of nuclear power stations being built in Florida?

CRIST: We already have them, Wolf. We already he nuclear power in the state of Florida. I have recently appointed a new public service commission which regulates that industry, the utility industry, in our state. They're allowing for two more nuclear plants in the Sunshine State.

I want to make sure that my fellow Floridians are always protected. The first order of government is health, safety and welfare. Well, safety and welfare and health in Florida means that those people have power, especially if we have to face hurricanes.

I want to make sure that the people I work for are always safe, they have the power that they need, the lights go on. That helps keep our community safe and our great law enforcement officers do their job better as well.

BLITZER: How worried are you -- because I know the governor of California, Arnold Schwarzenegger is very worried, he's a Republican, as are you, about the beaches, the coastline. He's worried about California, you're obviously worried about Florida. And we know all about hurricanes, category three, category four, category five. Are you concerned that a hurricane could cause some of those offshore oil drilling prospects that you're now supporting off the coast of Florida, damaging the beaches, the coastlines of your beautiful state?

CRIST: Like I tell my friends in the press corps in Tallahassee all the time, it's my job to be concerned about everything in Florida. Of course I'm concerned about it. That's why I think it's important that when we look at this issue, that it is in fact far enough, that it is safe enough and that it is clean enough to protect those beaches.

Tourism, as you know, Wolf, is an enormous industry in the Sunshine State. 85 million people toured the Sunshine State last year alone. Disney had a record attendance last year. Things are going well in Florida. We have challenges, but they are presenting opportunities.

Number one, we've got to protect our environment. Senator McCain understands that. He was the first guy who talked to me in fact about climate change and being concerned about it. And I enjoy working with my good friend Arnold Schwarzenegger. He's a great leader in California and he's doing right by my sister, who happen to be a Californian.

But we have to do things that help our domestic supply. The people who founded this country got it. They understood it when they signed the Declaration of Independence, not dependence. We need to make sure our country is independent, that we're strong, that we're not dependent on foreign oil. It's also a national security issue that John McCain understands.

OBAMA: If Senator McCain wants to talk about how Washington is broken, that's a debate I'm happy to have. Because Senator McCain's energy plan reads like an early Christmas list for oil and gas lobbyists. That's no wonder because many of his top advisers are former oil and gas lobbyists.

(END VIDEO CLIP) BLITZER: And he also makes the point that of the energy crisis and the dependence on foreign oil imports the United States over the past 30 years are simply getting worse and worse and worse. He says Senator McCain has been in Washington for 26 of those years and he really hasn't done much to stop it. Do you want to respond to that kind of criticism from Senator Obama?

CRIST: Sure, I would be delighted to. Let's look at the record. I know Senator Obama has not been in the United States Senate for that long, but he's been there long enough to vote. Long enough to vote in 2005.

And the irony here is that Senator Obama voted for the Bush/Cheney energy policy that gave billions of dollars in subsidies to big oil. Now, here his attacking Senator McCain? It was Senator John McCain, the maverick, the independent, he's his own guy, goes down to the floor of the U.S. Senate and on that same 2005 Bush/Cheney energy bill voted against it. John McCain puts country first. He understands the most important thing we need to do is to protect Americans, fight for them.

We don't need to be subsidizing big oil. We need to be fighting for the American people. John McCain has a right, Senator Obama just doesn't understand it and that's a shame.

BLITZER: Governor Crist, thanks very much for coming in.

CRIST: My pleasure. Good to be with you, Wolf. BLITZER: Thank you. Coming up next on LATE EDITION, we're standing by for a live conversation with the president of the republic of Georgia. Even as Russian war planes are dropping bombs right now on this small nation's capital Tbilisi. Stay with us. There's breaking news that we're following.

(COMMERCIAL BREAK)

BLITZER: Don't forget, coming up at the top of the hour, right after LATE EDITION, "FAREED ZAKARIA GPS." He takes a comprehensive look at international affairs with world leaders, policy experts and journalists. This week, Fareed discusses the future of the Pakistani government with a former politician, Imran Khan.

(BEGIN VIDEO CLIP)

IMRAN KHAN, FORMER PAKISTAN PARLIAMENT MEMBER: Musharraf's policy made the rich richer and impoverished the poor. So the anti-Musharraf feeling went against the U.S. Now the U.S. should learn that they must back Democratic forces and not actually prop up a military dictator.

(END VIDEO CLIP)

BLITZER: Right after LATE EDITION, stay tuned for "FAREED ZAKARIA GPS," only here on CNN.

And up next on LATE EDITION, we're going to be talking live with the president of the republic of Georgia, Mikheil Saakashvili. The latest on the breaking news, the escalating fighting between his country and neighboring Russia. We'll get the analysis on what's going on. Also, our political panel is ready to go as well. We'll assess the latest on the political fallout from the John Edwards scandal. Stay with us. LATE EDITION continues right after this.

(COMMERCIAL BREAK)

BLITZER: We're standing by to speak live with president of Georgia, Mikheil Saakashvili. That's coming up.

There's breaking news. The fighting intensifying right now between Russia and Georgia. We'll have all the latest, coming up.

Meanwhile, there's important political news we're following as well here in the United States. Right now, Senator Barack Obama is visiting his grandmother in Hawaii, but John McCain isn't taking a break, neither is our political panel.

Let's talk a little bit about the political fallout from John Edwards, the scandal, the extramarital affair. A sad story, indeed, by all accounts. Jessica, you covered his campaign. You were there, you had obviously no idea what was going on, that he was having this affair back in 2006 with this woman. But what about the damage right now, potentially, for Democrats. Is there significant damage that you see? YELLIN: I don't see this having a fallout effect on other Democrats. He was never particularly close with Barack Obama. They have not been together very much. There was that one time he endorsed Obama. He's not been out there as a surrogate. Look, it's damaging in general to everyone's impression of politicians and how honest they are, but I don't see this as having repercussions on the race.

HENRY: Democrats are just lucky he didn't win the nomination because right now your show would be a lot more exciting. Who's going to be the nominee? That's what's so reckless about what happened. The fact that -- not just the affair, but the fact that he ran for president anyway, with apparently both he and his wife knowing that this could come out.

BLITZER: I'm going to play a little clip, Joe. Listen to what he told Bob Woodruff of ABC News when he had this exclusive interview, sort of explaining everything from his perspective.

(BEGIN VIDEO CLIP)

BOB WOODRUFF, ABC NEWS CORRESPONDENT: Did you ever think this would end this way?

JOHN EDWARDS, FORMER SENATOR: I don't think anything's ended.

WOODRUFF: Your political career? EDWARDS: I see no end. I don't think anything's ended. My lord and my wife have forgiven me. So I'm going to move on.

(END VIDEO CLIP)

BLITZER: What do you think?

JOHNS: Well, Bill Clinton survived and he got hit with an impeachment hearing. You know, two things. You said at the top, you worry about his family. That's a family that's just been through so much. They've had a child die, I couldn't imagine that. And now this.

BLITZER: And Elizabeth Edwards last year was diagnosed with incurable cancer.

JOHNS: Exactly. So you take all that as a family tragedy, OK. But looking forward, the only thing they have to worry about in the immediate future is this thing dragging out. And there are a couple accountability questions. There are these payments floating around and of course he says that he wasn't paying anybody. She got paid by the campaign. There were some lawyer from Dallas who was kicking in some money. So there's some questions there that need to be answered and there needs to be full disclosure so they can put this thing completely to rest, for the good of the Democrats too.

BLITZER: And the other point that's still sort of a question mark out there right now, a big question mark. He says he's ready to take a paternity test because a child was born, and she now says, the other woman, that she doesn't want any paternity test.

YELLIN: Hollywood couldn't write it this good. It's just -- he -- you know, now she suddenly doesn't want his to happen, it can't happen without her will, so suddenly it can't be resolved. It leaves everybody with sort of a raised eyebrow. The larger question is what's the public's need to know? He's not a candidate, he's not an office holder. At some point there's a legality question because of the payments, but everybody's going to move on soon enough.

HENRY: What a dramatic fall.

BLITZER: Guys, I want all of you to stand by, because there's more presidential politics to discuss, including what Hillary Clinton really wants at the Democratic Convention.

But there's breaking news we're following right now. Escalating fighting going on between Russian troops, who have moved into the neighboring Republic of Georgia. Joining us now live from Tbilisi, the capital, is Mikheil Saakashvili, the president of the Republic of Georgia.

Mr. President, I hope you can hear me OK. Thanks very much for joining us.

What's the latest in terms of what your government understands as far as the Russian troops and your troops fighting in Georgia? Unfortunately, I don't think he's hearing me yet. We're going to try to clarify that, pick that up, but let's take a quick break. We'll speak with the president of Georgia right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We're standing to speak live with the president of Georgia, Mikheil Saakashvili. He's in Tbilisi right now. There are reports that Russian war plain planes have just bombed the international airport at Tbilisi, the Georgian capital. The United Nations Security Council meeting in emergency session right now.

As we wait to speak with the Georgian president, let's assess what's going on. Ed Henry, you're our White House correspondent. This potentially is a nightmare for the U.S. right now, given the fact that Georgia is a close ally, wants to be a member of NATO and there are really strained relations right now with the government in Russia.

HENRY: Absolutely. President Bush's support of the ascension to NATO by Georgia has been a sticking point with Vladimir Putin. Now the Medvedev government as well. But Putin is still around. This raises questions about President Bush's long relationship with Vladimir Putin, whether he's misjudged to Vladimir Putin, as to whether he really wants freedom, whether he really wants democracy. But also I think there could be energy implications, when you think about the pipeline there in Georgia.

BLITZER: So much oil and natural gas flows through the caucuses.

HENRY: Absolutely. And given the current energy crisis we're facing, obviously god forbid this escalates, who knows how that could have an impact on world energy prices, just for one thing, let alone the loss of life we've already seen.

BLITZER: And unless there's cooler heads that prevail, Jessica, and there's a cease-fire, return to what had existed, a fragile truce over these many years, there's no doubt that it could escalate. Now, Ukraine, another former republic of the Soviet Union says it's going to ally itself with Georgia against Russia and both of these countries, Ukraine and Georgia, they want to be members of NATO.

YELLIN: And this is one of those stories, Wolf, that puts, for example, the Edwards story in perspective. This is a life-or-death situation with such far-reaching consequences for the stability of that region.

I was with President Bush when we went to Tbilisi, Georgia, the press corps followed him there. We met with this president, Saakashvili, who came to talk to us, so excited about the democracy that was taking hold in his country and about the implications for that spreading throughout the region. There was such a sense of enthusiasm there. It's really tragic to see that this is now happening to his country.

BLITZER: It's an issue that seems to unite Democrats and Republicans right now, Joe. And the statements that are coming out from John McCain and Barack Obama, I don't see a whole lot of difference in those statements, as well as the statements coming from the Bush administration.

JOHNS: Well, it's certainly not possible at this stage. You've also got the United Nations Security Council weighing in. The world is watching this, even while we in the United States are kicking around a presidential campaign, it still shows you that the world can be a very dangerous place.

BLITZER: Does it bring into light that Hillary Clinton ad that she ran when she was running for the Democratic presidential nomination. It's 3:00 in the morning and that emergency phone rings in the White House and there's a crisis. This crisis right now between Russia and Georgia.

JOHNS: Very much so. And you look at the John McCain ads, the thing he's doing right now in this race, questioning whether Barack Obama is ready to lead. Americans can watch the headlines and say, oh, my gosh, this is a real, live situation in Georgia and what would these two guys do about it?

BLITZER: Who do you want to be in charge during a crisis like this? There's a war still going on in Iraq, in Afghanistan. Enormous tensions with Iran right now. Now you see these two countries that want to be NATO allies, Ukraine and Georgia in serious tensions. One of them actually at war right now with Russia. How does that play out politically?

JOHNS: It's big time. Because obviously, as Joe was saying, the bottom line is that John McCain is trying to say boldly that Barack Obama is not ready to be president. That's why both men in the last few days have been jumping out there, trying to make statements. They've both spoken to the president of Georgia. They want to show that they're ready to be commander in chief, but there's very -- there's real limits to what they can actually do as candidates.

BLITZER: All right. I think we've connected with the president of the republic of Georgia, Mikheil Saakashvili right now in Tbilisi. Mr. President, what is the latest as far as the actual battle, the fighting that is going on between your troops and the Russian troops?

SAAKASHVILI: Well, sorry, first of all, for this weird position, in a way. We sometimes -- our lines get under cyber attack, that's a new technology these days of war. But I can hear you well.

I think -- I mean, the point was that for the last several days, over 150 Russian tanks have entered the Georgian territories on the night of August 7th, and the whole hostility erupted when we responded to the tanks entering the Georgian territory. We had three days of fighting, but mostly we had -- besides fighting, the main thing was three days of intensifying bombing of Georgia and basically the bombing of 90 percent of predominantly civilian targets.

BLITZER: Is it true, Mr. President -- excuse me for interrupting -- that Russian war planes have now bombed the international airport where you are in Tbilisi? SAAKASHVILI: They've targeted international airport on a number of occasions. By the way, half an hour before French foreign minister and the Finnish foreign minister happened to land there, but I don't know exactly what the damage is.

But they've been hitting -- you know, yesterday they blew up the whole residential quarter, killing lots and lots of people. Today, they just hit a residential area in Tbilisi out of any strategic war military or anything, any enterprise. They've been continuously hitting some companies here.

But I was turning in Georgia, I have to explain to you just what's happening now. The South Ossetia is here. In South Ossetia, we control always this part and then Russian-backed separatists, basically Russia directly administered this part.

Now -- but Russian troops entered in from here, from here and Russian troops also came to our border here, with 100 tanks yesterday night. Here in Abkhazia, Russians entered yesterday with 100 plus tanks. They already had hundreds in place, and 10,000 or 15,000 extra troops. So they're here basically in this area.

BLITZER: The Russians, as you know -- excuse me for a second, the Russians are now disputing assertions from your government that you have pulled out your troops from these disputed areas of Abkhazia.

SAAKASHVILI: Well, look -- I mean, there have been no troops in Abkhazia, we are speaking about South Ossetia.

But we are not crazy. We are talking about mass (inaudible) land intrusion of Russia into any countries, bigger than with the force -- the tank force that went into Afghanistan in 1979 or Czechoslovakia in 1968. So certainly we don't have an interest in pursuing...

SAAKASHVILI: I mean, we relocated -- we had our troops in the town of Tskhinvali, and we relocated them out of the town of Tskhinvali outside the zone where they usually were stationed before, after they've completed the task of cleaning there -- basically, they're out. They're out. I can confirm.

SAAKASHVILI: Well, I mean -- again, we have no interest whatsoever in pursuing hostilities. This civilian targeting and casualties should stop now. Today I was traveling for the road in Georgia, and I saw with my own eyes, because I also can't take planes because the air belongs now to the Russians -- I saw with my own eyes, it's a holiday season and people are going and now running back to from the seaside holidays and from the mountains, because they had to find safe refuge.

SAAKASHVILI: And I saw with my own eyes how Russian planes were descending very low on the over the road, chasing the cars and dropping bombs in proximity of the place where there was a compilation of cars.

So this is -- this is -- you know, I'm president of the country, driving -- also, I'm protected, a bigger target like my fellow citizens. But I had to drive there, and they couldn't do anything about it. It is a tragic situation. And we need to...

BLITZER: Mr. President...

SAAKASHVILI: And we need to stop...

BLITZER: Mr. President, I just want to alert our viewers, we may lose the satellite. If it goes down, that will be the explanation.

But what do you want the United States, right now, to do?

SAAKASHVILI: The United States and the world community should stop intervention and invasion of my sovereign country...

(CROSSTALK)

BLITZER: How should the U.S. do that?

SAAKASHVILI: I think the U.S. is the most powerful country in the world. I think the U.S. has lots of leverage. And I think there are lots of diplomatic means that it could be done through.

And, basically, I think this is not about Georgia anymore. This is about basic values of humanity, of American values that we always, ourselves, believed in. This is all about human rights. This is all about the future of the world order. And I think there are much bigger things that are at stake here than just Georgia.

For me, it's all about my country. But for the wider world, it's about the future world order. Something that's happening here, you know, people -- history will judge very badly people who are doing this...

BLITZER: Well, let me ask...

SAAKASHVILI: ... killing (ph) innocent civilians.

BLITZER: Let me ask a blunt question. Would you like the United States to offer military assistance to your country right now?

SAAKASHVILI: Well, I wouldn't speculate about it, because I think our forces are capable enough, and they've been really doing a good job. But, you know, we need to stop hostility. We don't need further military action. We need to stop it. We need to bring back peace. And a cease-fire is about both sides (inaudible).

We proclaimed a cease-fire. We are willing to sign the document on non-use of force and nonresumption of hostilities. We are willing to be as flexible as we can on solving the issues. We need to bring back peace and to stop these innocent -- senseless, brutal, absolutely unacceptable killings.

BLITZER: The Russians say that you personally, Mr. President, should be held accountable for this very dangerous situation by your actions over the past few days. They call them a criminal political decision that you took.

Let me play this little clip. I interviewed, in the last hour, the charge d'affairs at the Russian embassy here in Washington, and he leveled a direct charge against you. Listen to this Russian diplomat.

(BEGIN VIDEO CLIP)

DARCHIEV: He should be held accountable for the barbaric and treacherous attack on innocent civilians in South Ossetia, that he should be held accountable for the aggression against South Ossetia.

And the best thing he could do right now is to unconditionally -- I repeat -- unconditionally withdraw his troops and sign a legally binding agreement with Ossetians on non-use of force.

(END VIDEO CLIP)

BLITZER: All right, Mr. President, do you want to respond?

SAAKASHVILI: Well, I mean, it sounds a little -- quite Orwellian to me and a little bit like old times, which I still remember. I was the youngest president of the world when I got elected, but I still remember old times and I still remember Brezhnev's times.

But the point here is the following. We are talking about a place just in the middle of Georgia, in the middle of my country. How can I invade the middle of my country?

What's the -- it's the contradiction in terms. And what we are talking about is we are talking about -- we controlled most of this area always, but there is a small area directly administered and run by the Russians.

And, you know, when they talk about South Ossetian separatists and say "South Ossetian tank," what kind of South Ossetian tank can live there? It is a Russian tank. You know, what kind of South Ossetian soldiers are that? These are soldiers in the service of the Russian army, trained by them, equipped by them, very well armed by them. So what we are saying right now is that this place needs to get rid of this military thing (ph). They need to get -- to be cleaned, you know, of all this violence. And this place needs to get back to normal. And certainly... BLITZER: Are you ready, Mr. President, to go back -- are you ready to go back to the status quo ante, what existed last week when there were Russian peacekeepers in that area before the situation escalated?

SAAKASHVILI: There were Russian peacekeepers and there were Georgian peacekeepers. And certainly we are willing to go to status quo ante, but certainly this mass intrusion of troops stop, troops should withdraw from sovereign Georgian territory, and we should do our best to just demilitarize the areas and then protect the civilians.

You know, the point here is we have the population here that is under our control is ethnically Georgian, but also mixed, because we are a multi-ethnic country. There is this town of Tskhinvali that was under control of the Russian peacekeepers, and that's fine. So far as we should do our best not to allow a resumption of criminal activities. And you know, shooting at people, smuggling, all kinds of illicit things. And that has been happening, and Russians have always been agreed with us that there was a problem.

The point here is that it got to the point when it's not just a matter of not anymore respecting the borders. And the borders on the Caucuses are built very high. These are very, very high mountains, and we have such a natural boundary that can hardly be overcome even by fast-flying Russian jets.

BLITZER: But Mr. President, do you honestly believe that Georgia's relatively modest military can compete with a superpower like Russia?

SAAKASHVILI: Well, I mean, I would be crazy to believe that. But you know, we are a free, small, freedom-loving nation. And certainly, you know, freedom is not about size. Freedom is about our ability to, you know, stand up for your ideals, even if it comes at sacrifice of your life. Certainly, freedom is about living normal lives and not killing or getting killed.

But I mean, it's very unfortunate circumstances, and I regret loss of life on both sides. But the point here is, our troops have been performing very well, but now we really absolutely need to halt these hostilities, because it's killing people. And it's killing much more civilians than it can ever kill the troops.

You know, the planes that are flying over, Georgian troops shot down almost 20 of them. Because they're equipped, they have the air defenses, but civilians on the ground, on the roads, in the crowded cafes, at their apartments where they got killed when the whole residential area was destroyed, they're not equipped with air defenses and we cannot supply them with air defenses. So the point here is that it's exactly doing that. So it's not about troops performing or not performing. Its' right now a huge human tragedy on the ground, and we absolutely need it to stop.

BLITZER: The Russians say that your troops have killed some 2,000 people in Ossetia among other places. Do you have any estimates as far as how many people have been killed and injured so far over the course of these few days of warfare that's been going on?

SAAKASHVILI: Well, let's put it this way. The town of Tskhinvali by the moment when Georgian troops entered it didn't even have that much number of people. It's a very, very small town. And prior to the fighting, anticipating the fighting, local Russian authorities evacuated most of the population. And we didn't anticipate fighting. Apparently, they did.

And we only responded when after many hours of artillery barrage, after a unilateral cease-fire declared by us that killed lots of people, by the way, because we wouldn't respond on our side.

Then when I heard around 11:30, 11:50 p.m. that 150 Russian tanks are entering our sovereign territory from this place -- there is a very mountain -- you know, long, mountainous tunnel called the Rocky Tunnel -- into the Georgian territory, our forces were stationed somewhere here. So when they got entered, the only way we could get them was to respond with artillery fire to stop mass land invasion of the sort that happened to Afghanistan and Czechoslovakia in 1968.

BLITZER: All right.

SAAKASHVILI: Now...

BLITZER: Let me interrupt for a second, Mr. President...

SAAKASHVILI: Of course, of course, of course there were -- yes.

BLITZER: A quick question about American citizens. I take it some of them are being removed. There's a corridor that they're getting out right now. About 2,000 U.S. citizens live in Georgia. Is that right?

SAAKASHVILI: Well, one has to say that America is very highly regarded in Georgia. By the way, that's maybe one of the reasons why we're being attacked. You know, one of the bombs -- one of the unexploded bombs found on a shut down Russian plane yesterday, tragicomically said, "this is for Americans, this is for NATO," in Russian. And it didn't explode.

But of course, you know, as much as we love Americans here, nobody is safe right now. And that's -- I deeply regret to say that.

And the point here is that today, two journalists from the West, one Georgian and one Polish, were killed in Tskhinvali by the fire of entering troops from Russia.

BLITZER: Mr. President -- Mr. President ... SAAKASHVILI: And this is very unfortunate. I want to express my deep condolences to their families. And please, we should halt this violence, halt this madness.

BLITZER: Mr. President, unfortunately, we have to leave it right there, but we'll stay in close touch with you. The president of the Republic of Georgia, Mikheil Saakashvili, joining us live from Tbilisi. Thanks very much. SAAKASHVILI: Thanks so much, sir.

BLITZER: That's it for today's "Late Edition." I'm Wolf Blitzer in Washington. "Fareed Zakaria GPS" starts in just a moment.